What is essential for effective internal controls according to COSO Principle 14?

Effective communication of information is central to internal controls as outlined in COSO Principle 14. This principle emphasizes the necessity of ensuring that relevant and timely information is communicated throughout the organization, at all levels, and across functions. When effective communication is established, it enables all stakeholders, employees, and management to understand their roles, responsibilities, and the relevant processes that contribute to the achievement of organizational objectives.

Communication must also encompass the dissemination of internal policies, changes in procedures, and important risk information so that all personnel are informed and able to respond accordingly. By fostering a culture of transparent communication, organizations can better align their actions with their strategic goals, facilitating more effective internal controls.

While regularly updating technology, maximizing revenue channels, and forming strategic partnerships can contribute to organizational success, they do not address the critical element of communication necessary for the effectiveness of internal controls. Communication creates the backbone through which accountability and responsibilities flow, making it indispensable to the COSO framework.